Public Bill Committee

[Mr Peter Bone in the Chair]
Written evidence to be reported to the House
GB 09 Campaign for Fairer Gambling
GB 10 Mike Winney
GB 11 Phill Brear, Gambling Commissioner, Gibraltar
GB 12 National Casino Forum - supplementary
GB 13 Financial Conduct Authority

Peter Bone: Order. Before we begin, I have a few preliminary announcements to make. Please would all Members ensure that their electronic devices are turned off or switched to silent mode during the Committee meetings? Copies of memorandums that the Committee receives will be made available in the Committee Room.
Before we begin our line-by-line consideration of the Bill, a brief reminder of procedure may be useful. The selection list for today’s sitting is available in the room. This shows how the new clauses selected for debate have been grouped together. New clauses grouped together are generally on the same or similar base issues. In clause stand part debates, I will call the Minister first and then the Opposition, with the Minister winding up. In other cases, I shall call the Opposition first and then again to wind up. Other Members are free to catch my eye to speak on the group. A Member may speak more than once in a single debate. Before Opposition Members sit down, they will need to say whether they wish to withdraw a new clause or seek a decision. Please note that decisions on new clauses take place not in the order in which they are debated but in the order they appear on the amendment paper. I hope that that explanation is helpful.
We now begin our line-by-line consideration of the Bill. We will first debate clause 1 stand part, with which it will be convenient to consider new clause 2. I remind Members that, even if a Member wishes to press new clause 2, it will not be voted on until the end of proceedings together with other new clauses.

Clive Efford: On a point of order, Mr Bone. I owe the Committee an apology. Rather than simply correct Hansard, I prefer to do this personally. In all the flurry of paperwork that I was dealing with during the evidence sessions I misquoted a letter. I said that a letter of 25 March 2011 was from the Secretary of State for International Development, the right hon. Member for Putney (Justine Greening), when in fact it was to her. That does not alter the force of my argument, but it alters one point that I made. It was not the stated intention of the Government to have the Financial Services Authority—now the Financial Conduct Authority —adopt licence condition 15. I take personal responsibility entirely for that error, but I wanted to correct the record and I thought it was only proper to do so here.

Peter Bone: Thank you, Mr Efford. That clearly was not a point of order, but it was most helpful to the Committee.

Clause 1  - Licensing of remote gambling

Question proposed, That the clause stand part of the Bill.

Peter Bone: I remind the Committee that with this it will be convenient to discuss new clause 2—Kite mark —
‘(1) The Gambling Commission shall require all licensed online gambling operators to display a standard kite mark on all their promotional materials, websites and webpages, to indicate that such operators are licensed by the United Kingdom Gambling Commission.
(2) The Gambling Commission shall design and determine the form of the kite mark, which will provide a link to information and advice on its website for customers.’.

Helen Grant: It is a great pleasure, as always, to serve under your chairmanship, Mr Bone. Clause 1 does not impose any new obligations, but it signposts the change made by subsection (2). Subsection (2) creates the new licensing requirement. It changes the regulation of remote gambling from regulation at the point of supply to regulation at the point of consumption.
At present, a remote gambling operator needs a Gambling Commission licence only if at least one piece of equipment used in the provision of the remote gambling facilities is located in Britain. A remote gambling operator will now need a remote gambling licence from the Gambling Commission if its remote gambling facilities are used by someone who is in Britain and it knows, or should know, that its facilities are being used or are likely to be used in Britain. That addresses the fundamental purpose of the Bill, which is to enhance consumer protection by ensuring that all operators offering remote gambling in Britain are regulated by the Gambling Commission, whether they are based in Britain or overseas.
The new licensing requirement will level the regulatory playing field and overseas-based operators will be subject to the Gambling Commission’s licence conditions and codes of practice, including social responsibility and technical standards requirements, licence conditions and statutory safeguards for the protection of children and vulnerable adults. For the first time, overseas operators will have to inform the Gambling Commission about suspicious betting patterns to help fight illegal betting activity and corruption in sport. That will also ensure that overseas operators contribute fairly to regulatory cost.
Clause 1(3) repeals section 26B(a) of the Betting and Gaming Duties Act 1981, which makes provision for remote gaming duty. That repeal will ensure that only existing operators are liable for remote gaming duty under the Bill. The Government do not intend to use the Bill to extend the remote gaming duty to a new category of operators requiring a licence from the Gambling Commission.
Clause 1(4) to (7) provide the Secretary of State with wide powers to create an advance application process, through which remote operators apply for a new or upgraded remote operating licence from the Gambling Commission before the commencement of the new licensing requirements. That will ensure that operators entitled to operate in Britain under a European Economic Area jurisdiction licence or a white list jurisdiction licence can make the transition to the new licensing regime with minimal disruption to their existing business in Britain. For those reasons, I commend the clause to the Committee.

Clive Efford: It is a pleasure to be here this morning, Mr Bone. It is a bright and sunny morning, so let us hope that we can have a bright and sunny debate and cheer people along on a dry but none the less important subject. We support clause 1, although we have one or two questions about it. New clause 2, which is on kitemarking and which we are debating with clause 1, is important. Kitemarking is key to consistency across the industry, and we need to get it right from the start.
In evidence last week, Mr Wallace from the Salvation Army, which monitors what goes on in the gambling industry and speaks up on behalf of people who may suffer from problems with gambling, said that he
“would certainly welcome a kitemark. Echoing Helena’s point, there should be larger, more prominent links to GambleAware to improve people’s knowledge of the treatment provided by, for example, GamCare. There should be a simpler, more obvious way to find the excellent information on the Gambling Commission website as people are playing, so they do not have to search the Gambling Commission website separately for it.”––[Official Report, Gambling (Licensing and Advertising) Public Bill Committee, 12 November 2013; c. 39, Q95.]
The Culture, Media and Sport Committee referred to that in its 2005 report “The Gambling Act 2005: A bet worth taking?” which recommended
“that the Gambling Commission should consider, as a part of efforts to communicate to online gamblers the potential risks to their funds, introducing a kite-marking system for gambling websites”.
That was referred to in the Government’s response to that report, which said that
“the Government notes the Committee’s recommendation that further emphasis is placed on the information made available to the consumer”
on sites licensed by the Gambling Commission. The Committee was informed that kitemarking would happen if the draft Bill was passed.

Gerry Sutcliffe: This comes to the essence of the Bill’s whole purpose, which is consumer protection. Requiring a kitemark would separate the approved sites from the non-approved sites.

Clive Efford: I pay tribute to the work that my hon. Friend has done in this area, both as a Minister and since we have been in opposition. He has continued to show a considerable amount of commitment to the care of those who suffer, perhaps more than they should, from problems as a result of a gambling habit.
The kitemark, as my hon. Friend said, is extremely important. There should be a set standard for displaying a kitemark and clear links to responsible gambling sites. Operators should clearly display it and we should set the regulatory standard for others to follow. The Gambling Commission recognises that. When Jenny Williams from the commission gave evidence last week, she said,
“We think that it is quite right that this could be a lot clearer…If you go on to any of the websites at the moment and compare the overseas websites…you will see that there is an absolute mess down at the bottom.”––[Official Report, Gambling (Licensing and Advertising) Public Bill Committee, 12 November 2013; c. 68, Q191.]
I have trawled around a couple of these websites in preparation for this morning. I must say that I did not gamble, but I had a look at what they were offering by way of links to advice and information, and it is poor. What is offered tends to be in a very small font, based at the bottom of the page—not in any prominent location—and there is some inconsistency in approach. All the websites have these links, but on Sporting Index, for instance, one must click on several links before reaching the sort of information that should be readily available. This issue clearly needs sorting out, and as legislators we must give clear direction about the standards we expect for the protection of our constituents. If we are serious about advising people about the dangers of gambling and the problems that can occur, we must ensure that the kitemark is in a prominent position. A Gambling Commission logo should be clearly displayed to demonstrate that a site is licensed by UK gambling regulations.
If the Gambling Commission has a logo or kitemark, we do not want to see it tagged on at the bottom of pages; we want to see it in a prominent position. We want it to become a mark of excellence, showing that operators have the highest regard for concerns about gambling. It would be to their credit that they are part of the system set up by the UK Gambling Commission and that they want to promote that. There should be simple links to sites such as GamCare, but customers should also be able to click on a Gambling Commission link to access a wide range of information advising them about the dangers of gambling with unlicensed operators, the details of complaints procedures and where to seek advice and assistance if they have any problems.
Support for kitemarking information has come from a number of those who gave evidence to the Committee. Helena Chambers of Quaker Action on Alcohol and Drugs said:
“On some of the sites, the link is tiny; it is in small writing at the bottom of the page in the terms and conditions…People need to have their attention drawn to it.”––[Official Report, Gambling (Licensing and Advertising) Public Bill Committee, 12 November 2013; c. 39, Q6.]
Gareth Wallace of the Salvation Army said,
“we would certainly welcome a kitemark. Echoing Helena’s point, there should be larger, more prominent links to GambleAware to improve people’s knowledge of the treatment provided”.––[Official Report, Gambling (Licensing and Advertising) Public Bill Committee, 12 November 2013; c. 39, Q7.]
Dan Boucher of Care also welcomed kitemarks, but raised concerns about enforcement. He made the point that a kitemark
“would be a good thing, but we should not be tempted to think that a kitemark was an excuse for not including proper enforcement provisions in the Bill.”––[Official Report, Gambling (Licensing and Advertising) Public Bill Committee, 12 November 2013; c. 39, Q8.]
The kitemark and enforcement are two sides of the same coin. The kitemark is not a replacement for enforcement, but nor is enforcement a reason for not having a kitemark on sites to demonstrate that they are properly regulated and provide proper information to customers.
A kitemark can be effective if customers are made aware of it. The British Standards Institution kitemark has been shown to have a considerable impact. A survey of customers found that 49% of consumers look for it when buying goods and services, so kitemarks can be effective. To achieve that, there must be a campaign by the Gambling Commission promoting the kitemark, the regulated sites and the means by which they are regulated.
We are left to wonder why what I have described is not happening now. There are sites run by organisations with which the Gambling Commission already has a relationship because they offer other forms of licensed betting. Although it does not regulate what those organisations do online, it is possible that, through its existing relationship with them, the Gambling Commission could have been urging them to standardise the form of information provided to customers. It is imperative that we ensure that the Gambling Commission sets a benchmark in regulation to maintain a high standard for consumer protection on that issue, paired with strong consumer recognition. We should set a standard that makes operators want to show that they are licensed by the UK.
New clause 1 would ensure that the Gambling Commission required operators to display a kitemark. We must insist that kitemarks are clearly and prominently displayed, and that they are uniform across sites, providing direct and easy links for information, advice and help. That should not be open to interpretation. Although we welcome the clause, I urge the Minister to consider our arguments on new clause 1.
I have a couple of questions for the Minister. Although we welcome the Bill, on the advance applications referred to in clause 1, is there an end time for the transitional arrangements? I fully understand the reasons for the transitional arrangements, but it seems a little open-ended at this time. Could we end up with a dual process?
Overseas operators not licensed by the Gambling Commission will be committing an offence if they advertise services here in the UK. The clause obliges them to block their sites. How does the Minister envisage that that will take place? How will the Gambling Commission require such sites to carry out blocking? It may be unintentional on their part. In its initial approach, how proactive will the Gambling Commission be in ensuring that such activity is monitored and stopped?
I hope that the Minister will take on board the arguments that we have made on new clause 1 and consider the questions that we have posed about clause 1. Our proposals provide a simple but important step to consumer protection, and we urge the Government to take them on board.

Gerry Sutcliffe: It is a great pleasure to serve under your chairmanship, Mr Bone. I declare an interest, although it is not declarable in the Register of Members’ Financial Interests: I am a trustee of the Responsible Gambling Trust, an organisation set up to help with research, education and treatment for people with problem gambling. The good news is that the last prevalence study showed that only 0.7% of people have a problem with gambling, and that those people usually have other problems as well.
The Bill’s genesis lies in consumer protection, which is why I support new clause 1. We want to give UK consumers assurance that when they gamble online, they are protected. The difficulty is that if they bet with somebody who does not offer the same terms and conditions and support for betting as authorised and licensed operators, their problems can increase.
Much to my surprise, the industry agreed to a voluntary code in terms of contributions to research on gambling. We considered a Government-supported levy on the industry in the event that it was not prepared to consider research, education and treatment. The good news was that there is now a voluntary levy, more than £5 million of which goes to fund investigations into research, education and treatment. The key point is consumer protection.
In her opening remarks, the Minister rightly mentioned the objectives of gambling legislation, which include protecting the vulnerable, preventing crime and ensuring transparency. The kitemark is an excellent idea. The drinks industry has Drinkaware to help people get support for potential problems, and Gambleaware and GamCare are great opportunities to provide a signpost. My hon. Friend the Member for Eltham made the point that if we had a kitemark, there would be no doubt about the existence of a standard and support.
I know that it is always difficult—gambling legislation is not the flavour of the month for any Government—but I hope that the Minister will hear what my hon. Friend said, support the idea in principle and perhaps come back on Report to say that she has looked into it in great detail.

Helen Grant: In relation to new clause 2, I thank the hon. Member for Eltham for his suggestion that all Gambling Commission-licensed operators should be required to display a kitemark on their websites to indicate that they are subject to UK regulation. As the commission said in an evidence session, it has already taken forward work to ensure that consumers can establish quickly what an operator is licensed for. It does not require primary legislation to achieve that; the commission can do it easily via licence conditions and existing powers.
The Government of course support the steps that the commission is taking to ensure that consumers can establish quickly whether they are transacting with a Gambling Commission-licensed operator. I am grateful to the Select Committee for its recommendations on that point, which were made by the shadow Minister. I am also grateful for the good work that I know has been done on consumer protection generally by the hon. Member for Bradford South, but given that primary legislation is not required, I do not intend to accept the new clause.
However, I reassure the shadow Minister and Committee members of my absolute intention that the Gambling Commission should pursue the matter. In that respect, I remind the shadow Minister and other Committee members that Ministers have powers under section 78 of the Gambling Act 2005 to require a licence condition to be added. I anticipate that the Gambling Commission will deliver on its commitment, but we still hold powers to follow up if necessary. On that basis, I ask him not to press new clause 2.

Clive Efford: It is all well and good that the Gambling Commission has those powers, but what does that mean? What will the Minister require of the Gambling Commission in terms of standards? At the moment, it could be said that everything she has said is satisfied by the current situation. Websites provide links to advice and information, but it is tiny and hidden among other information at the bottom of the page, not in a prominent location. Further—if you will permit me, Mr Bone, before this intervention turns into a speech; I think it already has—the kitemark would be prominent at the top and would set a standard for the industry. Others would look to it and want to achieve that standard. Will the Minister be looking for that?

Helen Grant: Of course. The shadow Minister makes a good point. We are all batting in the same direction. We want consumers to be protected, and we want the situation to be clear to them. The Gambling Commission made its intentions clear in the Select Committee. I am satisfied that it will pursue them, and I will keep a careful eye on the situation. It is a highly respected international institution, and we must allow it to get on with what it has said it will do. I reassure him that I will be watching the situation carefully to ensure that the Gambling Commission goes to the full extent needed.
The shadow Minister also raised a couple of other related issues. He asked about the transitional arrangements. Yes, there is an end time. Advance applications made before the date of commencement will be entitled to a continuation licence if the operator has an existing right to operate in Great Britain. He also asked about unintentional blocking. There is no need to block the site if they make applications in time for the continuation licence. The aim, of course, is that there is no disruption to existing business in Great Britain. On that basis I again ask him not to press new clause 2.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clause 2  - Repeal of existing offence of advertising foreign gambling

Question proposed, That the clause stand part of the Bill.

Helen Grant: The clause repeals section 331 which makes it an offence to advertise foreign gambling. The effect of the repeal is that operators based in European economic area states, Gibraltar or a white list jurisdiction will no longer be able to advertise remote gambling without a licence from the Gambling Commission. That is consistent with the purpose of the Bill, which is to ensure consistent regulation by the Gambling Commission wherever an operator is based. The clause also makes minor and technical amendments consequential on the repeal of section 331.

Clive Efford: I understand that we need to repeal section 331 because it prepares for the licensing of operators who are not currently allowed to advertise in Great Britain. My question is similar to one that I asked about the previous clause: when will the white list come to an end? Will we have a period of dual licensing, during which the white list still exists and new operators are licensed by the Gambling Commission? I want to understand how that will function and how long it might last. Might it drag on? It could be chaotic if there is not a plan to ensure that there is an end date. Could there be any legal challenges that would delay the ending of the white list system before we can fully implement a new regulatory system? I think I have spoken long enough for a note to reach the Minister.

Helen Grant: I am very grateful to the shadow Minister. The note reached me in the nick of time. The white list will come to an end on commencement and there will be no dual track in terms of continuation licences. I hope that that satisfies him.

Question put and agreed to.

Clause 2 accordingly ordered to stand part of the Bill.

Clause 3  - Advertising of gambling by way of remote communication: Great Britain

Question proposed, That the clause stand part of the Bill.

Peter Bone: With this it will be convenient to consider new clause 14—Advertising watershed—
‘The Secretary of State shall consult on the current regulatory position concerning advertising of gambling before the nine o‘clock watershed and shall lay before the House a report of the findings not later than the final sitting day before the summer recess 2014.’.

Helen Grant: The clause amends section 330 of the Gambling Act 2005 which governs the territorial application of the offence of advertising unlawful gambling by remote communication. Currently the offence of advertising unlawful gambling applies only to operators who have at least one piece of equipment located in Britain. Following this amendment it will also apply to operators with equipment that is capable of being used in Britain. The effect is that an operator will commit the offence of illegal advertising of gambling under section 330 if their facilities for remote gambling are capable of being used in Britain and a remote operating licence is required for the gambling to take place as advertised and the operator does not have one.

Clive Efford: I support clause 3, so most of my comments will relate to new clause 14 and gambling advertising before the 9 pm watershed, which generates a considerable amount of concern. The gambling industry’s code of practice for socially responsible advertising prevents gambling adverts from being shown before the watershed with the exception of bingo and sports betting around televised sporting events. Bingo is recognised because of its social aspect. When people go out to enjoy a night of bingo, there is a social-club atmosphere. Following that recognition, however, we now see online bingo operators advertising before the watershed, which was not envisaged at the time. There is an issue there, but we should perhaps examine the whole situation to see whether we are happy with it.
The national governing bodies of sport are concerned about the saturation of gambling advertising when sport is televised. It was not foreseen nine years ago when the 2005 Act passed and it is time to examine what happens when a football match is shown on TV, which is when many children will be watching with their parents. We should check whether it is acceptable or needs reviewing. If the sports themselves are concerned about the image now being portrayed now that there is so much remote gambling advertising, is it time to review the regulation?
Last week, the industry indicated that it was open to such a review. In answer to my question, Clive Hawkswood of the Remote Gambling Association said:
“I wrote the industry advertising code…If there is evidence of harm, we would of course be happy to review that.”––[Official Report, Gambling (Licensing and Advertising) Bill Public Bill Committee, 12 November 2013; c. 17, Q45.]
We should welcome that responsible attitude.

James Duddridge: To what degree are straight-to-web TV, Netflix, Sky and recorded TV making the watershed increasingly irrelevant? While new clause 14 is interesting, it is perhaps flawed in that it misses the marketplace. More and more frequently, people do not watch timed TV.

Clive Efford: That is a very good point, but it is an argument that says we should examine the matter and not one that says that there is nothing we can do. I am not suggesting that there is something that we must do, but we are the regulators and we are elected to Parliament to be responsive to the concerns and issues of those whom we represent. I confess that I get concerned about the aggressive nature of some of the in-play betting advertisements when I watch football on TV. Should children as young as primary-school age be exposed to such adverts when they watch the FA cup final or an England game with their parents? It is a legitimate question. I am not suggesting that I have all the answers, but we should examine the issue.

James Duddridge: If it is a legitimate question, would it not be better placed in a broadcasting Bill or for Ofcom to investigate it, rather than simply looking at it through the prism of gambling, which is simply one form of advertising that concerns hon. Members? There are actually an awful lot of other types of advertising, such as alcohol advertising, that are even more sensitive than gambling.

Clive Efford: The hon. Gentleman may well be right about that, but we can only deal with the legislation before us. The provisions are about advertising remote gambling, and we are discussing advertising of remote gambling at the time of sports events, so it is reasonable to make suggestions to the Minister.

Jim Shannon: The hon. Gentleman has put a pertinent point to the Committee for consideration. The legislation may offer an occasion to address an issue that I know is a problem among my constituents. I welcome the hon. Gentleman’s raising the issue and I hope that the Minister can address some of the issues that concern me, concern the hon. Gentleman, and should concern us all.

Clive Efford: I agree with the hon. Gentleman and am grateful for his comments. As I said in answer to the hon. Member for Rochford and Southend East, I am not suggesting that we must ban pre-watershed advertising, or that we must act now; I am merely responding to growing concern about such advertising. Perhaps, in response to today’s discussion of the issue with the Minister, the industry itself will take a look at what it is doing and, without any form of regulation, say: “Perhaps we need to look at how we are doing this and the amount of advertising for in-play gambling that goes on during sports events.”
I understand that sports such as horse racing are so closely related to gambling that they would perhaps not even be on television if it was not for gambling advertising. A ban could harm a sport that is a great tradition in this country. I understand that the issue is not simple, but, as the people responsible for legislation and regulation, we would be criticised if we overlooked it in a Bill dealing with remote gambling and advertising.
There has been a large increase in complaints about gambling advertising, largely relating to remote gambling. In his evidence, Gareth Wallace said:
“In 2011 there were 154 complaints to the Advertising Standards Authority about gambling adverts; in 2012 there were 873.”––[Official Report, Gambling (Licensing and Advertising) Public Bill Committee, 12 November 2013; c. 45, Q19.]
That shows a significant increase in concern about the standard and type of gambling advertising, which suggests that we have a duty to investigate.
There must be concern about the impression that advertising of gambling is having on young people, most of all about such advertising before the watershed. Professor Jim Orford said that pre-watershed advertising was
“making it very difficult for parents to resist the pressure from their children to take part in online gambling.”––[Official Report, Gambling (Licensing and Advertising) Public Bill Committee, 12 November 2013; c. 45, Q19.]
There has been very little research into the issue, but I have identified some from Australia. An Australian Psychological Society letter dated 4 March refers to research indicating that
“an increase in exposure to gambling advertising and opportunities is a risk factor for the development of gambling problems”.
That gives rise to a number of concerns about how gambling advertising is contributing to the background noise that young people hear on social media, where we see free gambling, which we will come to shortly. The issue is similar to concerns about the impact of tobacco advertising. There were concerns that young people were presented with a lot of advertisements for tobacco when they went into shops to buy sweets and other things. Should gambling advertising be shown when young people are likely to be viewing TV?
Some anomalies are thrown up. Young people can watch a football match on TV, but a gambling company cannot put a logo on a junior football club shirt. Gareth Wallace used that example; he held one up and pointed out that in football there is a restriction on putting a gambling advert on a youth strip, but not on putting one on an adult strip. That is nonsense when there is pre-watershed advertising, and we should take the issue on.
We are not talking about a blanket ban or taking action without consulting first, but I am eager to hear whether the Minister thinks the current situation should be looked into. Does she feel that the present intensity of advertising, particularly at times when young people watch sport such as during an England game, is what Parliament envisaged when the Gambling Act 2005 was debated nine years ago?

Gerry Sutcliffe: I support what my hon. Friend is saying. In evidence to the Select Committee, the former Cabinet Minister Mr Richard Caborn admitted that the 2005 Act was not perfect. Negotiations took place towards the end of the parliamentary term. I do not say there were back-room deals, but perhaps negotiations were not based on factual evidence.
One of the consequences of the Act was advertising. I put my hand up and say that I got it wrong, as the Minister responsible. We wanted transparency in advertising. The hon. Member for Rochford and Southend East is right that the matter needs to be considered in a wider sense. The intention was to be a bit more transparent and—returning to the idea of consumer protection—ensure that people betting with recognised companies were safe and protected. The idea was to allow advertising around major sporting events.
What I did not realise at the time was that competitiveness in relation to people’s access to sporting events went across all the channels. The hon. Member for Rochford and Southend East has pointed out that people can watch different sports at different times of day now. We did not expect the severity of what happened with advertising. I am a big fan of Ray Winstone, who is a fantastic actor, but at half time at football matches he begs people to bet on who will score the next goal, or do this or that. That is not how I expected the advertising to work. We need to think about that.
I know that the Bill is a short, sharp measure and the Minister wants to get it through, and I understand why. However, it provides us with an opportunity to discuss gambling issues in detail. We need to re-examine advertising. I take the point about the inappropriateness of the watershed now, because different platforms are available, and people can watch TV at different times. However, advertising has gone further than we expected it to when we liberalised it.
The relationship between sport and gambling is being thrown into question. I asked at the evidence sitting last week about sports rights and betting rights. Who is the owner of the right? The sporting organisations should be in control of who is allowed to bet on their sport. Betting now takes place on the next goal, the next corner or the next time the ball will go out of play, and that is fine—I have no problem with it; but the sport should be in control of it. Unfortunately, younger players or those not at the top level—in the second and third divisions of football or the lower leagues of other sports—are getting involved in match fixing and cheating.
Who controls a sport’s betting rights and how the sport is advertised on TV is a real issue. I am sure that we shall have a wide-ranging debate about the scope of advertising, and how it influences people. I ask the Minister to examine the situation. We said that we would review things after a time, and unfortunately that never happened. We need to look at the impact of advertising in the gambling industry.

Helen Grant: I thank the hon. Member for Eltham for highlighting with new clause 14 the current regulation of gambling advertising. The regulatory arrangements already put in place a number of controls that are set out under the codes administered by the Advertising Standards Authority, the Broadcast Committee of Advertising Practice and the Committee of Advertising Practice. The codes seek to ensure that adverts do not glamorise gambling, exploit vulnerable people, appeal to children or suggest gambling as a solution to financial difficulties.
Gambling operators wishing to advertise in the UK need to comply with the relevant advertising codes of practice. The conditions set out in the codes already apply to remote gambling operators licensed in other jurisdictions and will continue to apply under the new regulatory regime. Adverts that breach the advertising codes have to be amended or withdrawn. If serious or repeated breaches occur, those breaching the codes can be reported by the Advertising Standards Authority to the Gambling Commission and to Ofcom.

Gerry Sutcliffe: I am grateful to the Minister for giving way, and I do not want to stop the flow of what she is saying, but there is concern within the industry on where the industry is with advertising. As we know, the gambling industry is very competitive. Voices within the industry are saying that things have gone a little too far, so perhaps—not necessarily today, but at some future time—the Minister can return to this issue and speak to the industry about its concerns.

Helen Grant: The hon. Gentleman makes a good point, as he always does on many of these issues. If he bears with me, he will hear from me what is happening. A number of individuals and organisations are aware of some of the dangers and concerns, and I will explain what we are doing about them.
The gambling industry has developed its own code: the gambling industry code for socially responsible advertising. That code provides for a 9 pm watershed on all broadcast gambling advertising, with the exception of bingo and lotteries, and sports betting based around televised sporting events. There are high compliance rates with each of the advertising codes.
While the Government are satisfied that strong codes are in place, I acknowledge the growth in gambling advertising that has occurred following the introduction of greater freedoms to it in 2007. I note what the former Minister, the hon. Member for Bradford South, said about that. Nevertheless, I am keen to understand what impact that greater freedom might be having on the licensing objectives of the Gambling Act 2005.
To that end, the Government are already exploring a range of issues on gambling advertising with Ofcom, the Gambling Commission and the Advertising Standards Authority. While those regulators have received anecdotal evidence of public concern about the frequency and volume of gambling advertising, and the potential exposure of children, there is no firm evidence that gambling advertisements are jeopardising the licensing objectives.
To better understand the prevalence of gambling advertising on broadcast media and how much children are exposed to it, the Government requested data from Ofcom earlier this year on trends in volume, scheduling, frequency and exposure since gambling advertising arrangements were relaxed a few years ago. Those data, which were provided to me last month and published this morning, show that the total amount of gambling advertising has roughly trebled since restrictions were relaxed in 2008 from approximately 500,000 spots per year to just less than 1.4 million in 2012. However, the scheduling restrictions imposed by the 9 pm watershed have limited children’s exposure to gambling advertising. In 2012, advertising for betting services accounted for a relatively small proportion of gambling advertising—just 7%—and less than 1% of all advertising shown on television.
Additionally, more than 84% of all betting adverts are shown after 9 pm, with nearly 60% shown after 11 pm. Although the data indicate that the current scheduling restrictions are working to limit children’s exposure, I continue to pursue robust evidence that any increase in gambling advertising might be affecting the licensing objectives.

Clive Efford: Those figures are interesting, but there is no question that anyone is breaching the code. The question is whether the code is sufficient in this modern, advanced industry to protect the most vulnerable, particularly children. Also, the statistics that the Minister read out do not deal with when pre-watershed adverts run. The point being made, particularly about sporting events, is that many such adverts are on air at times when children will be watching. It is about the concentration of pre-watershed advertisements around events that attract the attention of young people.

Helen Grant: I hear what the hon. Gentleman is saying. I respectfully suggest that he grab a copy of the Ofcom data, maybe in the gap between sittings today—

Clive Efford: Certainly between now and Report.

Helen Grant: Yes, and the hon. Gentleman can put further issues to me later.

Gerry Sutcliffe: On a related point, does the Minister know whether the national lottery is included in the statistics? If she does not have the answer immediately, she might want to write to the Committee, because the relationship between the national lottery and gambling is interesting.

Helen Grant: I am certainly happy to write to the hon. Gentleman; I cannot give him the answer at the moment.
In addition to the data and the reassurances that we have received about the effectiveness of the watershed and the scheduling restrictions, we are concerned to ensure that compliance rates remain high. The Advertising Standards Authority is therefore producing new guidance to operators on gambling in general, with a specific focus on free bets. That guidance will be launched shortly.
We are doing everything that we can to keep up the pressure. There is no complacency here whatever, although I accept that there has been a considerable increase in advertising since 2008, when the restrictions were relaxed. I reassure the Committee that the Government are already taking action to understand the facts around gambling advertising and establish where it might be having an impact on licensing objectives. Although I do not rule out consulting on proposals to improve the regulatory arrangements in future, I believe that a statutory obligation to consult on the specific issue of the 9 o’clock watershed is unnecessary at this time.
Finally, Committee members will also know that advertising provides an important revenue stream for sport, which is why it is important that we establish the facts before considering what action may be necessary. I therefore do not believe it appropriate to accept the new clause, and I hope that in the light of the information that I have provided, the hon. Gentleman will agree not to press it.

Question put and agreed to.

Clause 3 accordingly ordered to stand part of the Bill.

Clause 4  - Offence of advertising unlicensed remote gambling: Northern Ireland

Question proposed, That the clause stand part of the Bill.

Helen Grant: The clause introduces a new offence of advertising unlicensed remote gambling in Northern Ireland. It applies only to Northern Ireland. The new offence prohibits remote gambling operators from advertising remote gambling in Northern Ireland unless the operator has a remote gambling licence from the Gambling Commission.
Gambling is a devolved matter. However, Northern Ireland law does not regulate the advertising of remote gambling; it is regulated by section 331 of the Gambling Act 2005. On the repeal of that section, there would therefore be no prohibition on the advertising of remote gambling in Northern Ireland, so the new offence will close the gap and bring Northern Ireland back in line with Great Britain on the advertising of unlawful remote gambling. It puts in place the same protection that applies in respect of British consumers. The Northern Ireland Assembly passed a legislative consent motion agreeing to the new offence on 17 June 2013. I commend the clause to the Committee.

Clive Efford: I have nothing to add to what the Minister has said. The clause is perfectly acceptable—and inevitable, as we want consistent licensing regulation throughout Great Britain. We accept the clause.

Question put and agreed to.

Clause 4 accordingly ordered to stand part of the Bill.

Clause 5  - Extent, commencement and short title

Question proposed, That the clause stand part of the Bill.

Helen Grant: The clause sets out the territorial extent and commencement provisions of the Bill. Clauses 1 to 3, which include the new licensing requirements, will apply only to England and Wales and to Scotland, as the licensing regime established by the 2005 Act extends only there. Northern Ireland has its own licensing regime, which reflects a different devolution settlement.
Clause 2(1), which repeals section 331 of the 2005 Act, also extends to Northern Ireland, and clause 4, which puts in place the new offence of advertising unlicensed remote gambling, applies only to Northern Ireland. Section 331 is one of the few provisions of the 2005 Act that extends to Northern Ireland. Its repeal would therefore create a gap in protection for consumers there, so the new offence remedies that, bringing Northern Ireland back into line with Great Britain, so that remote operators will be able to advertise remote gambling only if they have a licence from the Gambling Commission.
Subsections (4) to (7) of clause 1 come into force on the day on which the Bill is given Royal Assent. They confer power to make an order establishing an advance application process, whereby an operator may apply for a remote operating licence before the commencement of the remainder of the Bill. This ensures that arrangements can be put in place to minimise disruption to the business of those operators currently entitled to operate in Britain.
The Bill’s remaining provisions will come into force on such day as is appointed by order. Different days may be appointed for different purposes, and the commencement order may also include
“consequential, transitory, transitional or saving provision”,
as is generally the case.

Clive Efford: I accept the clause, but I have a question about the elements of the commencement that are subject to approval by the Secretary of State. It is similar to a question I have already asked but, at the risk of repeating myself, I will ask it again. Does the Minister anticipate any delays in the commencement of the Bill, such as a gambling operator mounting a legal challenge that might hold it back? Given a smooth roll-out of the Bill, when would she expect those elements that are subject to the Secretary of State’s approval to come into force?

Gerry Sutcliffe: We were told in evidence last week that the Gibraltar gambling commission was considering its options, so it would be helpful if the Minister would outline the procedure if there is a legal challenge to the Bill from one of the offshore operators.

Helen Grant: I do not anticipate any holdups, but—in a way this is connected to the timing referred to by the shadow Minister—I can say, in terms of transition, that the scheme will start in the spring of 2014. A statutory instrument is being created for that purpose to avoid any holdups or disruption to business. There is little further to add, save to say that at this moment I am not aware of any significant challenges that are about to be made.

Gerry Sutcliffe: The Minister is saying that the Bill will proceed in the normal fashion, regardless of whether there are any challenges whatsoever. That is important, because while some of the threats to challenge legislation might have been off-putting, she has reassured us that the procedure will carry on regardless.

Helen Grant: I can confirm that the Bill will proceed, notwithstanding legal challenges. We are happy and content that the Bill is legally sound.

Question put and agreed to.

Clause 5 accordingly ordered to stand part of the Bill.

New Clause 1  - Licence compliance, stipulations and control

‘(1) Notwithstanding the regulation of spread betting by the Financial Conduct Authority, operators licensed for remote gambling by the Gambling Commission shall, to ensure their continued fitness as such, be obliged to comply with Condition 15.1 of the Consolidated Licensing Conditions and Codes of Practice 2011 (or its equivalent from time to time) in relation to all areas of their gambling operations, including spread betting and any other operations not within the jurisdiction of the Gambling Commission.
(2) In the event of any breach of subsection (1) which the Gambling Commission believes calls into question the fitness of the relevant operator, the Gambling Commission may require the operator to provide an explanation of such breach within one month and may, if not satisfied with such explanation, revoke the operator‘s licence.’.—(Clive Efford.)

Brought up, and read the First time.

Clive Efford: I beg to move, That the clause be read a Second time.

Peter Bone: With this it will be convenient to discuss the following:
New clause 4—Reporting of suspicious activities and power to obtain financial information—
‘In order to promote consistency of sports betting regulation, regulation of remotely conducted spread betting and therefore of all spread betting shall be transferred from the Financial Conduct Authority to the Gambling Commission, which shall thereupon—
(a) have power to require and obtain from its licensees including spread betting organisations information concerning actual or potential suspicious activities in relation to sporting events, and to share such information with the relevant sports governing body;
(b) have power to require and obtain information on financial transactions by licensees which it reasonably suspects might be germane to the investigation of suspicious betting activity, money laundering or other criminal activities, or the protection of vulnerable individuals.’.
New clause 13—Discussions between gambling regulatory bodies and sports governing bodies—
‘The Secretary of State shall have power to make regulations, to be laid before and approved by both Houses of Parliament, stipulating the manner and time of regular meetings between any and all of the gambling regulatory bodies and sports governing bodies.’.

Clive Efford: New clause 1 covers the behaviour of betting organisations that are licensed by the Gambling Commission, but may operate in other jurisdictions, as well as operations such as spread betting that are not licensed by the Gambling Commission. It would allow the commission to consider any actions on the part of an operator that would have been a breach, had they happened under its jurisdiction, and thus to determine whether that operator is fit and proper to be licensed in the UK. It would therefore ensure that an operator could not operate at a lower standard elsewhere or become involved in serious malpractice, yet expect to be licensed in the UK.
Some areas of gambling operate under such a high standard of regulation. I believe that some casino licensing authorities in America apply such an approach to their casino operators so that if they breach a code, even if is outside an authority’s jurisdiction, that will be taken into consideration when considering its licence. We should consider such an approach so that we set a high standard for people who want to enter the UK market. The UK’s remote gambling industry represents one of the most advanced markets, so it is only right to set such standards.
New clause 4 is straightforward. It refers to the transfer of responsibility for enforcing licence condition 15.1 on spread betting from the Financial Conduct Authority to the Gambling Commission. New clause 13 would require the Government to ensure that those who regulate online gambling are in regular dialogue with those who are directly affected: the sports governing bodies, which have a lot of intelligence about what is going on at grass-roots level.
I do not like reading speeches, but I need to get across several detailed key points. As we have reached an important aspect of the Bill, I will attempt to read my contribution, but I hope that I will not sound as though I am reading out the telephone directory and that hon. Members’ ears are not bleeding when I finish. I want to cover seven areas: the importance of sports integrity; spread betting markets and sport; licence condition 15, and why information sharing and early notice is so important; the concerns of the sports governing bodies; the Government’s call for consistency and an effective approach; the Financial Conduct Authority and how it goes about its business; and—the reason for the provisions—what should be the next steps.
Promoting and upholding integrity is one of the key functions of all sports governing bodies and event organisers. The whole concept of sport is based on fair competition between participants under agreed rules. It is a vital principle for any sport that all its participants are competing to win, and that its officials are honest and are seen to be so. Those who seek to influence the outcome or progress of sports events to secure rewards through betting undermine that principle. Any suspicion that that is happening can be deeply damaging. The growth of betting services means that sports must remain vigilant against the negative impact that that can create.
The Minister will be familiar with historical and recent occurrences when people have tried to corrupt sport for financial gain through betting. Sports governing bodies, the Government and the Gambling Commission must remain alert to those dangers and treat corruption connected with betting with the same intensity of action as that taken to ensure that sports remain free from doping. Michel Platini and the previous president of the International Olympic Committee, Jacques Rogge, have both described match fixing as the biggest threat facing sport. Indeed, that was one of the reasons why the previous Government began the work, under the stewardship of my hon. Friend the Member for Bradford South, that led to the introduction of the Bill.
Recent years have seen a huge growth in sports betting that has been fuelled by the internet, new media and the popularity of in-game betting. At the same time, we have seen the introduction of a new licensing regime that gives betting companies greater freedoms in how they can operate and market their products. The Gambling Commission has introduced a robust regime that works for sports bodies, but unfortunately we have had to witness a large number of British online betting operators moving overseas and offering services back into the UK. In doing so, they have moved outside the UK’s regulatory framework. In response to that concern, the previous Government commissioned the Parry review of sports betting integrity. In that report, Rick Parry highlighted the specific risk posed to sports integrity as a result of the current licensing regime allowing remote betting operators to base themselves outside the UK, thus evading the Gambling Commission’s licensing regime, which has important integrity mechanisms built into it.
Although the Government are now acting to address that concern, nothing is being done about spread betting. Spread betting on sport is growing in popularity, and the nature of that kind of bet, whereby the return is unlimited, makes it a high-risk activity and an area that needs regulation. Spread betting markets require sports to pay a lot of attention to protecting the integrity of their sports. It is possible to gamble on a whole range of sports—boxing, cricket, football, horse racing, greyhound racing, rugby union, tennis and so on. Cricket alone spends £2 million on protecting the integrity of its sport. The Minister and I, as people responsible for speaking up on behalf of sport, should be concerned that so much of a sport’s money is being diverted away from activities such as grass-roots sport. Similarly, horse racing spends about £2 million a year on protecting the integrity of its sport.

Gerry Sutcliffe: My hon. Friend comes to the nub of the point: a sport is not in control of what people can bet on. While gambling companies can promote bets on any aspect of a sport, the sport has no control over what such a bet can entail.

Clive Efford: Yes. I had a quick look on the spread betting website this morning to see what bets it was offering in relation to today’s England game. It offers a curious set of bets, which show the sort of thing that can go on. There is the opportunity to bet on the total number of bookings between each side. If England were to get more bookings than Germany, I would get 10 points for a yellow card and 25 points for a red card. Depending on which way I bet, the difference would be calculated to determine how much I won or lost. The point about spread betting is that what a player loses is open-ended. If they lose, the greater the difference, the greater the loss; it is multiplied by the difference. It is possible to bet on the number of yellow and red cards that are issued against a team, the number of corners awarded during a game, the number of penalties that are taken and whether or not they result in a score, and the score against each side.
I am not suggesting that in tonight’s match an England player will kick the ball out for a corner 10 minutes into the game, but that could happen in a less high-profile match. If the exchange of information between the sport that is being gambled on and the operator is not seen and there is no requirement on that operator to share that sort of information, there has to be some concern. The sports themselves are worried about how open to that sort of corruption spread betting is. Licence condition 15.1 would require those online spread betting operators to inform the relevant sport if they detected any suspicious activity. At the moment, that is required by the Gambling Commission and it would be a requirement for all of the remote licensees under the new regime but it will not be a requirement on those who operate spread betting.
Back in May a jockey and three others were handed lengthy bans from racing, having been found in breach of a number of rules relating to conspiracy, corruption, stopping a horse and passing inside information. The corrupt betting linked to the jockey Eddie Ahern and his friend, Neil Clement, a betting account holder, took place over five races. The panel found that in one of those races Ahern had stopped the horse deliberately to lose. That information came to light as a result of intelligence that the sport itself had. It was alert to the activities that were taking place around these individuals. It had invested money in monitoring and detecting this sort of behaviour and was aware of the problem. So that did not come about as a consequence of licence condition 15.1, which requires people to inform the horseracing authorities that this was taking place.
All sports are worried that this type of corruption could be taking place in spread betting, but there is no requirement on spread betting operators to provide that information or to alert the relevant sports bodies. So as regulators we cannot afford to leave the spread betting market unregulated.

James Duddridge: The hon. Gentleman repeatedly refers to the spread betting marketplace. New clauses 4 and 1 refer to the marketplace as a whole. He solely prays in aid the sports spread betting industry. I have not heard him come up with another example. Is he concerned that new clauses 4 and 1 are flawed in that they might catch exchange traded funds and financial markets at spread betting where there is an underlying transaction that a company is trying to hedge against?

Clive Efford: No, because the clauses specifically refer to sports activity.

James Duddridge: I quote from new clause 4:
“all spread betting shall be transferred”.
New clause 1 talks about spread betting and does not mention sport, unless I am misreading and another clause defines spread betting.

Clive Efford: I am advised that the Bill is tightly worded so that it can deal only with issues relating to sports advertising and sports betting. I would have thought that that would bring the amendments into order.
We are discussing spread-betting organisations being licensed by the Gambling Commission for any activity that relates to sports and requiring them, under licence condition 15.1, to make the relevant sports governing body aware. The Gambling Commission can take that into consideration when deciding whether an organisation is fit and proper to hold a betting licence.
There is a danger that, as we correctly address overseas betting operators, we will encourage cheats and criminal activity to move to an area that they know does not have the strict information-sharing requirements created by licence condition 15. The Gambling Commission applies licence condition 15 to all those who hold a betting operator licence. It places a legal requirement on betting operators proactively to share information and to report suspicious betting patterns to both the Gambling Commission and the relevant sports governing body. I will not read out licence condition 15 now, but it places a requirement on those taking bets on a sport to provide information to the relevant sports governing body if they are aware of any suspicious activity. They could lose their licence if they did not comply.
The provision is important. As we heard from the representatives of the sports bodies who gave evidence last week, they need information urgently. If there is an irregular betting pattern that may suggest a breach of rules and they are notified quickly, they can take action to prevent it. That might include changing the referee or umpire for the match or warning players that their conduct will be watched carefully. It is vital that policy-makers give sport and the regulatory bodies all the powers that they need to fight match-fixing. Our failure to apply licence condition 15 to spread betting undermines that.
As we heard last week, all the major sports bodies are alarmed about the situation, including the Sports Rights Owners Coalition, which represents bodies such as FIFA, UEFA, the International Cricket Council and the International Tennis Federation, and the Sport and Recreation Alliance, which is the umbrella body for all of sport and recreation in the UK and acts as the secretariat to the Sports Betting Group. Specific representations have been made by the Rugby Football Union, the Rugby Football League, the Lawn Tennis Association, the Football Association, the Premier League and many other bodies.
Nic Coward, speaking on the behalf of the Sports Rights Owners Coalition, said to the Committee last week:
“We think it is a serious anomaly. As has been said, we do not think that the regulator’s identity matters, but there must be the same obligation and effect as is imposed by licence condition 15.1 on whatever form of operator. That should include a spread betting operator. We think that is a serious flaw in the current system.”––[Official Report, Gambling (Licensing and Advertising) Public Bill Committee, 12 November 2013; c. 8, Q7.]
Tim Lamb of the Sport and Recreation Alliance told us that
“it is an anomaly that spread betting is regulated by a different authority from the rest of betting in sport and we strongly believe that the principles underlying licence condition 15.1 should be extended to spread betting as an absolute minimum. Ideally, we would like to see spread betting come under the auspices of the Gambling Commission rather than the Financial Conduct Authority.”––[Official Report, Gambling (Licensing and Advertising) Public Bill Committee, 12 November 2013; c. 22, Q58.]
The Sports Rights Owners Coalition submission to the Committee states:
“There are very few sports that have not had to deal with betting integrity and SROC welcomes the measures contained within this Bill which will strengthen the legislative framework for protecting sport from these threats. We also think that the Bill needs to go further to meet these objectives and that includes the following measures being introduced”.
It wants betting on sport to be brought under the remit of the new licensing regulations, so that all betting is regulated by licence condition 15.1.
The Sports Betting Group’s submission sets out several measures that it would like to see:
“One area where the SBG feels that the Bill could be strengthened is in relation to the regulation of spread betting. Whilst the Government should be commended for its efforts to ensure that all fixed odds betting operators offering bets in the UK comply with Licence Condition 15.1 on information sharing, the same is unfortunately not true for spread betting companies.
Spread betting companies are regulated by the FCA rather than the Gambling Commission and as a result are not required to share information on suspicious betting patterns in the same way that fixed-odds operators are via Licence Condition 15.1. While the two companies currently offering spread betting on sport in the UK have voluntary information sharing agreements in place with the FCA, the SBG feels that these should be replaced with robust, statutory arrangements.
This view is backed up by evidence provided by Jenny Williams from the Gambling Commission during the pre-legislative scrutiny stage of the Bill. Taking the example of the fixed odds betting operators, she said that the Gambling Commission received one or two reports a month from its online gambling licensees, who handled less than 20% of the market, but from the 80% licensed overseas (which had voluntary agreements in place) the Commission had received a total of about ten since 2007. Ms Williams suggested it was implausible that so few suspicious transactions had been reported.
The Sports Betting Group is dissatisfied that despite raising this issue with the FCA for many years, it has not received any satisfactory answer as to how it intends to address the regulatory shortcoming.
This anomaly should be rectified as soon as possible and tabling an amendment to this Bill would be a way of achieving this. We have been in dialogue with the FCA and GC for over a year and we have been assured that the matter is being looked into but we are still to see any substantive progress. An amendment to the Bill would expedite this process and bring spread betting companies into line with traditional operators. This would be a major boost to sports integrity and the fight against betting related corruption in sport.”
That is a powerful demand from a wide range of bodies dealing with all the major sports and many others for something to be done about spread betting and licence condition 15.1. It could not be clearer.
Last week the Minister stressed to the Committee that the Bill was about improving protection for consumers and sports fans in the UK, and repeatedly pointed out the importance of consistency. That is the reason for introducing the same licensing arrangements for betting operators based overseas as for those based in the UK.
The Government have expressly said in evidence to the Select Committee on Culture, Media and Sport that they want to achieve that:
“There is currently no way to ensure that the protections of the gambling regulatory framework, in particular those afforded by licence condition 15 on reporting suspicious betting activity, are applied on a consistent basis to all operators who transact with British consumers or allow bets on British events. This is because regulators in other jurisdictions do not automatically notify the relevant British authorities about positive evidence of match-fixing and suspicious betting practices taking place on overseas licensed sites (including those that may have an impact on sports events held in Britain). Some operators share some information with the Gambling Commission in addition to their home regulator on a voluntary basis. However, according to the Government, this is often of insufficient detail to be used in an investigation, and there have been instances where the Gambling Commission has been unable to obtain information from the overseas licensed operator or regulator. In some cases the Gambling Commission is told the refusal to provide information is because of overseas data protection requirements. The Gambling Commission reported that since 2008 there had been only ten references of suspicious transactions from remote gambling operators unlicensed in the UK, and it gave specific examples of the difficulties in obtaining adequate and timely information from overseas operators.”
The gap created by that inconsistency is recognised by the Government and is clear for all to see.
Why have we reached the stage of wanting to amend the Bill? Spread betting is regulated by the Financial Conduct Authority. This type of betting is generally seen, given the open nature of the risk taken, as more akin to a financial investment. I do not hear any evidence that the entire spread betting market should not be regulated by the FCA going forward. It is clearly a specialist form of betting. However, we have had compelling evidence that specific action needs to be taken on sporting integrity where there are two main spread betting companies taking spread bets on sporting events.
The sports bodies have provided us with evidence that the first formal raising of the issue with the FCA was in March 2011, when Nic Coward, who was then chief executive of the British Horseracing Authority, wrote to the right hon. Member for Putney, who was then a Minister in the Treasury, to raise his concerns about the failure to introduce regulations that would protect sport from the problems that might be occurring in the spread betting markets. He concludes by saying:
“This failure to impose duties to help protect sport on which spread bets are being enabled is a failure of the system which we have reason to believe, from our own investigatory actions (in conjunction with the police and Gambling Commission), has very serious implications for…sport”.
The Sports Betting Group wrote to the hon. Member for Fareham (Mr Hoban), who was also then a Minister in the Treasury, on 8 June 2012. There was a limited response—a response of sorts—in which the Minister did say that the issue would be under review by the FCA and that dialogue would take place with the stakeholders. However, we heard in evidence last week that the FCA has not met any of the stakeholders in sport. In fact, it is highly questionable, given the answers that we heard from the FCA last week, whether it puts the regulation of spread betting relating to sport high on its agenda at all—whether it sees that as a core function of the FCA. Given how important this area of betting is to our major sports, that has to be worrying. This is not a criticism of the FCA as such, because it has an enormous amount of regulatory responsibility. In a sense, we can understand that sport might not be seen as a core function and a high priority for its resources. However, that makes it all the more worrying that we do not have consistency in relation to licence condition 15.1.
The Sports Betting Group tells me that many e-mails have been sent and phone calls made to the FCA, but with very little response. The FCA told us last week that it had not met the sports governing bodies. I cannot think of any stakeholders more important than the sports governing bodies, which need to be notified as a matter of urgency whenever there are suspicious betting patterns on their sport. In its evidence last week, the FCA was clearly not on top of this issue. It referred to “informal arrangements” with the spread betting operators. When I asked whether that was how it approached all its relationships with the people it regulates, it was quite emphatic that it was not. It has a loose and informal arrangement with the spread betting operators and has not met the sports governing bodies, yet that is not the way it approaches its regulatory responsibilities in other areas. That clearly is not good enough. I was encouraged to see both the Minister and the head of the Gambling Commission clearly trying to secure commitments from the FCA to have equivalent codes, but that assurance, despite being clearly sought, has not been forthcoming.
We have come to the point at which we all agree. The current Minister, the previous Minister, the Gambling Commission and the sports world itself agree that there needs to be consistency and a level playing field in regulations, and that it is important to uphold the integrity of sport. That is one of the main reasons why the Bill is before us.
The new clause is intended to ensure that the Bill will see holistic, consistent coverage, so that every bet placed on sporting events in the UK is regulated to the same high standards, whether the bet is placed in a betting shop, online with an operator in Gibraltar, over the phone to an operator in the Isle of Man, or with a spread betting company. Sport cannot rely on the informal and voluntary arrangements that seem to be the modus operandi of the FCA when it comes to sport. The integrity of sport is too important to rely on good will and a handshake.
The appearance of the FCA last week as witnesses did not reassure any of those who were present that we should have confidence that it is effectively addressing the issue, and that there will be any movement on its part to adopt licence condition 15.1 in the near future. Therefore, we feel that without a specific guarantee-type commitment from the Minister, from her ministerial colleagues at the Treasury, or from the FCA itself that they will introduce licence condition 15 as a matter of urgency, we are right to proceed with an amendment to bring spread betting into the remit of licence condition 15.1. This will give the sporting world the certainty that it needs against match fixing. The amendments are intended to promote the consistency of sports betting regulation.
New clause 1 imposes a condition that will require that all online operators who offer spread betting are brought into the remit of the Gambling Commission’s regulations, which would include licence condition 15.1. New clause 4 has the intent of transferring the regulation of remotely conducted spread betting, and therefore of all spread betting, from the Financial Conduct Authority to the Gambling Commission.
This change in licensing requirements will give immediate effect to the important intent of the Gambling Commission having the power to require and obtain from its licensees, including spread betting organisations, information concerning actual or potential suspicious activities in relation to sporting events, and to share such information with the relevant sports governing bodies. I commend the new clauses to the Committee.

James Duddridge: I think the shadow Minister is right to highlight issues relating to sports spread betting and the potential concerns. Punters in Southend placing a bet would certainly share some of those concerns, given national stories. I would, however, gently say that if these are more than just probing amendments, I am disappointed. Perhaps the new clauses were drafted before Second Reading, when I and other Members expressed concern about the wide definition of spread betting and the use of the terms “sports spread betting” and “spread betting” almost interchangeably. I believe that new clauses 1 and 4, as they stand, are fundamentally flawed, badly drafted and poorly thought through, which is disappointing given that the points they address are reasonable.
In future, there could possibly be an enhanced role for the Gambling Commission over sports spread betting. However, in terms of overall value rather than number of transactions, I would estimate that financial services transactions would be greater than betting transactions. I think it is right that the Financial Conduct Authority retains control over those financial spread betting transactions, whereas I think that the Gambling Commission perhaps does have a role to play on sports spread betting. I very much hope that new clauses 1 and 4 are probing amendments, and will not be pressed.

Clive Efford: I just want to allay the hon. Gentleman’s fears about the drafting. I am sure he is aware that the Government will always draft their own amendments anyway, even if they were to accept the force of my argument. However, it does refer to licence condition 15.1, which, in effect, only relates to spread betting on sports events. Other forms of spread betting would not be related to sporting events and would not be covered by licence condition 15.1.

James Duddridge: The hon. Gentleman may be right in relation to new clause 1; I am not necessarily conceding that, but he is certainly not right about new clause 4, which does not mention licence condition 15.1 in any way. That new clause specifically includes all spread betting. New clauses 1 and 4 are fundamentally flawed. It would have been much more helpful if the shadow Minister had done his homework and put something on the table that the Minister could develop and fine-tune, rather than rewrite entirely.

Clive Efford: I am sure the hon. Gentleman will learn how these things happen in due course. The first line of new clause 4 states:
“‘In order to promote consistency”—
the Minister used that word—
“of sports betting”.
The new clause refers to sport.

James Duddridge: The hon. Gentleman is being selective in his quoting. I have quoted this before, but the new clause does state:
“In order to promote consistency of sports betting”—
but it then continues—
“therefore of all spread betting shall be transferred from the Financial Conduct Authority to the Gambling Commission”.
I might have to shoot down to the House of Commons Library to find a dictionary to see what “all” means, but in my experience it means everything.

Clive Efford: I am grateful to the hon. Gentleman, but that sentence makes it clear that if the spread betting was not sport-related, it would not be covered by the clause or the Gambling Commission.

James Duddridge: I totally disagree with the hon. Gentleman. I am not a lawyer and I shall not sully his reputation by suggesting that he is or has been a lawyer, but it is clear to me that the new clause covers all spread betting. If the new clause is probing, perhaps the Minister can go away and look at it, but it would have been much more helpful if the new clause had been fully thought through, particularly because both Government and Opposition Members raised the issue on Second Reading.

Gerry Sutcliffe: I hear what the hon. Gentleman is saying, because there is agreement across the House on the issues around spread betting and new forms of betting on sport. My hon. Friend the Member for Eltham is right to raise this issue.
The Minister might be unable to deal with this within the scope of the Bill, but there is a fundamental relationship between sport and betting. I say now, because our proceedings are spied or visited from outside the House, that the majority of British sport is clean. There are no fundamental problems in relation to the issues around sport or sports betting. I came to that conclusion by looking at two issues: the impact of betting on sport and the impact of drugs on sport. We set up the national anti-doping agency, and I am happy that we are leaders in the world on anti-doping attitudes in sport.
Sport is fundamental to our country, and we only have to look back at the success of the Olympics and Paralympics last year to see that. It was a great pleasure to see that sporting success gee up the nation in its sporting impact. So doping is a key element, but I think increasingly, betting is too. One reason why I set up the Parry inquiry to look into sports betting rights was the relationships that were coming into sport, not necessarily just within the UK. My hon. Friend referred to the horse racing scandals, but Members will remember the young Pakistani cricketer with his career ahead of him who got caught up in a betting scandal. There were also issues with betting in the far east on second and third-division football in the UK, where some lower-league players were throwing games.
Sports betting is not a massive problem, but it is one that we need to address. The Bill needs to be consistent, and that is why my hon. Friend is right to try to make licence condition 15.1 applicable to the Bill, notwithstanding the need to be specific about the betting being sports-related. It should not be beyond the wit of us all to come back on Report and table an amendment, if the Minister accepts the principle of what we are saying: that mentioning licence condition 15.1 in the Bill would give us consistency.
The relationship between sport and betting is vitally important. We can see the competitive nature of the gambling industry and we talked earlier about the increase in advertising as betting operators fight to get customers to bet with them. That is, however, true in sport as well. We can see the coverage that we get from Sky Sports and BT Sport and all the other bodies that bid for our great sporting events, but it is time that the relationship between gambling and sport was looked at. Sporting bodies should be able to control what bets can be taken on their sports. At the moment that is not the case. Any authority that a sports governing body has is negated by gambling companies’ ability to pick any aspect of a sport and allow bets to be taken on it.

Graham Jones: Would a perfect example of that be the no ball scandal?

Gerry Sutcliffe: Exactly. My hon. Friend makes the point about the no ball scandal. The integrity of sport is vitally important. It is a grave mistake for sports governing bodies to have no control over what is bet on in their sport. As the situation becomes more competitive, bets on incidental things become even greater, whether on the number of no balls, the number of corners or the number of times the ball goes out of play. The opportunity for young sportsmen and women to be corrupted into kicking the ball out—which they may not see as cheating but in fact is cheating—becomes a problem within the sport.
The new clause on regular meetings between sports governing bodies and gambling companies is vital. If we cannot reach an arrangement where the sport is in control, and rights can be shared between sports governing bodies and betting companies to see what offer is appropriate, there is the danger that sport will become corrupt. That would be a problem for us all because sport is an integral part of our nation’s psyche, as is gambling. The previous Conservative Government introduced the national lottery, and what a great thing it is in terms of its commitment to spending on good causes, particularly sport. However, there is an inconsistency even there. The Government have just announced the merger of the National Lottery Commission with the Gambling Commission. In the UK you are not allowed to go into a betting shop until you are 18, but you can buy a national lottery ticket at the age of 16. There are a lot of inconsistencies.
It might be difficult for the Minister to address these issues within the scope of the Bill, but these concerns are starting to come forward. We need to modernise the relationship between sports and betting. The last thing that any of us would want to see is the nation moving away from sport because people feel corrupted by the lack of integrity in sports. The issue of doping is well documented. You have only to look at cycling, and the effect on the sport of the Lance Armstrong case.
I ask the Minister to look at increasing consistency by mentioning licence condition 15.1 in the Bill, and perhaps to come back on Report when we can get an agreement on how we need to move forward on that. Regarding the principle of the relationship between sport and betting, I believe that on this occasion the sports rights coalition are correct. There needs to be a stronger relationship between the world of sport and the world of betting.

Helen Grant: I thank the hon. Gentleman for raising the important issue of reporting suspicious market activity and the regulation of spread betting. The new clauses would oblige sports spread betting operators to report suspicious market activity to the regulator and to the relevant sports governing bodies. They also stipulate the regularity with which gambling regulatory bodies should meet sports governing bodies. I understand why these new clauses were tabled, and I agree that all gambling operators, whether they provide spread betting or fixed odds betting services, should be subject to obligations to report suspicious market activity.
I am satisfied that the current arrangements are working well in allowing the sharing of information between the Financial Conduct Authority and the Gambling Commission, and the two firms operating sports spread betting. The shadow Minister referred to the evidence which was provided in Committee by a number of witnesses, but I remind him that Nic Coward of the Premier League said:
“We do not think, therefore, that there needs to be a substantial change”—[Official Report, Gambling (Licensing and Advertising) Public Bill Committee, 12 November 2013, c.9, Q8.]
in the regulation of spread betting. Tim Lamb of the Sport and Recreation Alliance said:
“We have written to the FCA and we have had a helpful response. The intention is to meet with it to see if we can work collaboratively together”.—[Official Report, Gambling (Licensing and Advertising) Public Bill Committee, 12 November 2013, c.22, Q58.]
That indicates that progress was being made.
To strengthen the current arrangements, the FCA has stated that it is considering issuing guidance to those firms, advising them of their obligations to notify suspicious market activity and to provide clarity about the definition of suspicious market activity. I look forward to seeing the product of its consideration sooner rather than later. It is important to note that the FCA already has at its disposal a number of supervisory and enforcement tools to ensure that firms comply with the principles and rules.
The FCA requires spread betting operators to advertise their products in a fair, clear and not-misleading way. That includes providing suitable risk warnings to potential customers. There is also an obligation on sports spread betting operators to assess whether the product is appropriate for customers; this is a significant control, which acknowledges the level of risk for sports spread betting products. It is right, too, that a consistent approach is taken, as mentioned by the shadow Minister, in regulating all spread betting, whether sports or financial. I am content that the FCA should make any decisions on the regulatory framework for the sector.
The shadow Minister referred to the integrity of sports betting generally, as did the hon. Member for Bradford South, and to the Parry review. I genuinely believe that the current system will be enhanced by the Bill, which will extend the ability to collect intelligence. In addition, the sports themselves should impose robust sanctions to deter corruption. Such sanctions are for the governing bodies to determine, not Government. I note that, following the Parry review, most sports have worked hard to develop education programmes and to put systems in place to combat cheating. I am sure that such progress will continue, as it must.

Clive Efford: The Minister has prayed in aid the premier league and Tim Lamb, but that contradicts the bodies that represent the premier league, which have lobbied this Committee, the Select Committee and others, as well as Tim Lamb himself. In his evidence, Tim Lamb made it quite clear that the fact that spread betting is not covered by licence condition 15.1 is a major flaw, and the Minister herself has called for consistency. We are not satisfied with the current situation, in which we have a growing market of betting on sport in the spread betting industry, which is regulated to a different standard and level from those activities licensed by the Gambling Commission. There is an exchange of information directly with the sports governing bodies, which the FCA accepts that it has never met. The Minister must be concerned that there is a serious flaw in the regulatory regime.

Helen Grant: I hear what the shadow Minister is saying, but I do not accept that the system is broken or that legislation is the answer to absolutely everything. In referring to what a number of witnesses said in Committee, I was simply wanting to apply a little balance.
The Government have no current plans to make the regulation of spread betting the responsibility of the Gambling Commission, but clearly it is not something that I would rule out in the future, were it to become appropriate. I hope that I can provide the hon. Gentleman with a little reassurance by telling him that I intend to write to the FCA Minister about the matter and to follow up what progress the FCA has made since the letter referred to by the shadow Minister was sent, and since the comments on guidance and further action made by the FCA in Committee. It is unwise to be prescriptive in legislation about the timing and manner of engagement between sports governing organisations and gambling regulatory bodies, which should take place in a productive manner appropriate to the circumstances. For those reasons, I do not intend to accept new clauses 1, 4 and 13.

Clive Efford: Mr Bone, am I speaking to the whole debate or only new clause 1 at this stage?

Peter Bone: At the moment, we are debating new clause 1, but you do not have to make a decision whether you want to press a vote on new clauses 4 or 13 at this stage.

Clive Efford: So, to be clear, I am summing up the whole debate at this stage?

Peter Bone: Yes. I should just explain to the Committee: we are debating the three new clauses, but the rules are that we do not vote on them all at this time.

Clive Efford: For the benefit of the hon. Member for Rochford and Southend East, I was clarifying whether I was to speak only on new clause 1 because that is the only measure on which we can vote. We must deal with new clause 3 before we can vote on new clause 4. That is why I sought to clarify what I was being asked to respond to.
I am really not satisfied with the Government’s response. We are being asked to accept the status quo, where we have one form of regulation from the FCA and another from the Gambling Commission. Of course, the Gambling Commission’s licensing regulation area will expand because it will now be licensing offshore, remote gambling operators advertising in the UK.
When she asked questions of the FCA, the Minister herself talked about consistency. We cannot talk about consistency while we allow dual regulation to continue, so we must find a mechanism that allows us to introduce licence condition 15.1 into spread betting operations. That means either that the FCA must adopt condition 15.1, and that the Gambling Commission must become the licensing body for spread betting, or that the Gambling Commission must introduce a mechanism whereby it can take into consideration the activities of those operators it licences for betting—it can only be those operators—which may also operate in spread betting or another jurisdiction relating to other betting activities. The Gambling Commission will then be able to say, “If you have breached the standards we expect under our code and regulations, that can be taken into account when we consider whether you are an appropriate operator to be offering services to UK customers.” That seems a perfectly reasonable and sensible thing to do. It would increase the scope of issues the Gambling Commission can take into account when considering which operators it should licence in the UK.
If we are not going to alter the FCA licensing regime in order to adopt licence condition 15.1, then logically the Gambling Commission must become the licensing body for spread betting. It is a fact that the time has come. I do not accept what the Minister said about the current situation being satisfactory and that we should continue as we are. The time has come for us. We are legislators and will ultimately be held accountable. If the system breaks down and people are dissatisfied with it, it is to us, as the ones who set the framework for such licensing regimes, that people will look and ask, “Why did it go wrong? Why did you not take this action?” The situation we are in has existed for too long, but we have an opportunity to change it that we should not miss.
I intend to press new clauses 1 and 4 to a vote because we must send a message that up with this we will not put. It is time for change. It is time that we altered this anomaly and made sure that all sports betting was licensed under one standard.

Question put, That the clause be read a Second time.

The Committee divided: Ayes 8, Noes 9.

Question accordingly negatived.

Peter Bone: Mr Efford, do you want to press new clause 2, which has already been debated?

Clive Efford: No.

Ordered, That further consideration be now adjourned. —(Karen Bradley.)

Adjourned till this day at Two o’clock.